The World's Unsexiest Business

If you do business in the state of California and have a sizable minimum wage workforce, I’m sure you’re well aware that as of July 1, the state minimum wage increased to $12 for employers with 26 or more employees. But a rather large looming question is it ultimately going to benefit the minimum wage earners? I’m inclined to say maybe with a strong bias towards no. Given my lack of a truly enlightened academic perspective on the issue, I'll leave the nitty-gritty minutiae to a legislators versus labor economists forum.

Speaking to my ‘no’ bias, from a pragmatic entrepreneurial point of view, I will add that in all well purposed idealism, the measure is seeking to narrow the gap between rich and poor by a bottom up approach. I’d also like to make it entirely clear that I personally support any restoration of a middle class.

But that doesn't mean the intended recipients of the bump in pay will see the increase in its entirety. After all, with declining margins in brick and mortar businesses (where a large chunk of minimum wage labor exists), what's the incentive for the business owner to not cut overtime followed by a reduction of wage hours? And then when wage increase become so financially punitive, a last ditch effort comes into play for which eventually the business succumbs to labor force downsizing--ultimately realizing to the perilous fate of a closure. The last step that’s alarming yet largely ignored is a consideration of how purchasing power could plummet as the measure works its way through the greater economy.